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Thursday, September 15. 2011
The term 'Black Swan Event' entered our lexicon recently, but the idea has been in existence for many years. It has Latin roots, from a phrase that described 'a rare bird in the lands, and very like a black swan'. This was common saying, at a time when black swans had not been discovered. Upon its discovery in 1697, the black swan ceased to be a impossible thing, and became one which was improbable yet capable of being rationalized and institutionalized after its discovery, as if it should’ve been expected.
The Republicans have a dilemma. If they are unable to craft a message which separates and elevates them above Obama, and if unemployment alone is not enough to undermine Obama's support, what else can they rely on to assist them to victory?
The answer is, a Black Swan Event, or some semblance of one. Perhaps Black Swan is harsh – the essence of the concept is that it should be rare and unexpected. But some more mainstream events are typically labeled 'Black Swans', so that should be the focus. There have been some market crashes which could be termed 'Black Swans', most notably those in 2008, but market crashes are entirely predictable in a broad sense (though hard to time) and therefore cannot fulfill the 'improbable' clause required to make them true Black Swans. For the purposes of discussion, these are included, because events such as these do alter how people view things – and are the real driving force that will impact an election.
To 'predict' a Black Swan, we'll need a list of some events that commonly fit the description. The assassination of Archduke Ferdinand and the outbreak of WWI would be one. The Titanic. Pearl Harbor and the Doolittle Raid on Tokyo. The assassinations of JFK and Martin Luther King. Watergate and the Nixon Pardon. The Iran Hostage crisis. Clinton's Monica Lewinsky trials and travails. 9/11. Less fitting the description are: the 1929 Market Crash and ensuing Depression, the 1987, 1998 and 2008 Market Crashes, the 1991 Recession. Not all are pure 'Black Swans', but each one had an impact on the US or world, altering how we view our society, our economy, the world, or our political system and politicians. There's no need to delve into every one to see how this happened and why, but a few should be looked at in order to gain insight on how they can impact an election.
Black Swan Events can happen before an election cycle, and their lasting effects are likely to have an impact. Watergate and the Nixon Pardon were two very surprising events which, taken in tandem, undermined Ford's opportunity to win in 1976. The 1991 Recession undermined Bush 1. Some that happened during the cycle were the Iran Hostage Crisis, which was Carter's undoing, and the 2008 market crash that ultimately hurt McCain’s chances of winning as he appeared unpresidential versus an engaged Obama. Here in 2011, we're in the election cycle already, so something unexpected or unwanted would have a major impact simply due to timing. But what events? How would they alter outcomes?
It's the economy, stupid! But not just the economy; it's really about unemployment remaining over 9.0% and is unwanted, not unexpected. Should the economy continue to muddle along, it may not hurt Obama much more than it already has. Inflation, however, could be the Black Swan. Inflation is already rising, and gold prices indicate much more is expected. The Fed is keeping interest rates low, meaning they are fueling prices through easy money. The concept that 'we have no inflation right now' is a meme common in the media, but incorrect. Using the Consumer Price Index (CPI) as it was designed in the 70's, which had more emphasis on the purchase price of everyday items, inflation is well above 9.0%. Current CPI, which focuses on a broader range of hard goods, has hit an annualized monthly rate of 6.0% several times (.5% July, Feb and March 2011). It is not lost on policymakers that 'Core' inflation includes Food and Energy, items we use everyday, so we have begun to hear inflation reported without these included, to produce a more palatable figure. Shadowstats, which utilizes an economically honest methodology, has annual inflation well over 10.0%. A deflationary economic environment, in which prices are rising, is astounding. This can only be explained by Fed easing of interest rates. With continued easing now promised, if Inflation becomes an issue prior to the election, it will represent a 'Black Swan'. Jesse Jackson’s 'Misery Index' will be resurrected, this time by a Republican.
A terror attack of substantial size is another. What form this would take is difficult to imagine. We can't know whether it would be against the military (as in the USS Cole or Ft. Hood) or the citizen population (9/11 or Bali 2002). In all likelihood, an attack would result in increased military activity that would most benefit a sitting president. It's a chance to look decisive and show action. There is a scenario in which an attack implies the incumbent president was ineffective. But the killing of Bin Laden is a wild card, it's almost certain that Obama will use such an attack to showcase his willingness to 'get tough'. Voters don't like to change presidents at a time when the threat level is high – too many unknowns are in play.
A thwarted large terror attack would truly be a Black Swan, and benefit Obama greatly. Imagine the effect of a massive attack on a public space, say JFK Airport. Now imagine the group perpetrating it being infiltrated, the terrorists arrested, the bombs defused, and people rejoicing at the value of the protection they received. No matter how many people are out of work, most will view their leader as a man of action, courage, and resourcefulness. Those who continue to oppose him would be unpatriotic!
Any scandal – either side could suffer from this – which strikes at the core of a candidacy. Currently, the one which may be most likely is that of Obama's relationship with Solyndra, recipient of millions in Federal support for solar technology. One of Obama's biggest fundraisers is a Solyndra investor, George Kaiser, who introduced Obama to the company, helped set up the government funding, and may have used the loan to get his money out, or at least used some degree of impropriety in directing the 'competitive, non-political' process. Other green companies such as an electric car manufacturer lacking a prototype and gearing their cars toward high-end purchasers (Tesla and Fisker), also received 'non-political' support. To make matters worse, Fisker was making the cars in Finland. Meanwhile, home-grown firms with prototypes geared toward average consumers were overlooked and left to struggle without the value of a high profile political operator.
The core point of the Black Swan is its ability to alter how people perceive their world, and how the event impacts their behavior. In an election, the Swan doesn’t have to be completely Black, it just needs shades of Grey for the purposes of manipulation. Perhaps, if readers wish to share their thoughts, we will have someone predict a true Black Swan and Maggie’s Farm will have a big fluffy Black Swan feather in its cap.
Posted by Dr. Mercury in The Culture, "Culture," Pop Culture and Recreation at 11:30 | Comments (20) | Trackbacks (0)
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I cannot think of any strange event that might help the O's re-election. These are fragile times (partly due to him), both here and abroad.
Fear is a great motivator. People are reluctant to change leaders in times of extreme fear.
I would like to believe there are no events which could lead to his re-election. I know that's just not true. He still has a very strong base of true believers.
It doesn't have to be 'strange', just unexpected. I can think of a few.
1. Hurricane Zelda smashes into New Orleans, Obama is there that afternoon with a bucket, shirt sleeves rolled up, bailing out the city. He then takes charge of the Superdome and this time there are no rapes, abortions or dead bodies piling up.
2. The plane carrying all of the Republican candidates goes down in a fiery ball of twisted molten metal.
3. Al Queda attacks the White House, Obama grabs one of the Marine's rifles and joins the defense. He's later credited with taking out the Al Queda leader with a superb piece of marksmanship. "I sure wish we had him on our team," General Burton Sanders was later quoted as saying. "He's a credit to his race -- and so articulate!"
4. The brave Obama signs Executive Order 3452-463-01 which declares that we no longer recognize China as a nation and our entire national debt is immediately wiped out.
They later called the election, "the biggest landslide in American history."
At this point would 0's re-election qualify as a black swan event?
It's funny that this article posted today, a morning where I heard no fewer than 3 TV talking heads say "Obama is unlikely to get re-elected, as his Democratic base is bolting."
Of course, there is always the staple O-believer to shoot back "at least he's doing something". But the believers may be shrinking. Or not. Depends on who you talk to, I guess. In New York, it's typically Obama or nobody, because there is no way a New York City resident would ever consider voting against the Democrats.
Despite the current trend of 'Obama's losing traction' talk, I still am not convinced. His believers are true believers, and his base is huge. For Obama's approval ratings to dip much below 40% would, to me, be a "Black Swan". Above 40%, where they should remain based on his likability, he always stands a chance of winning.
No, I didn't say I like him. I said he has impressive likability, and that's undeniable. By now, Bush's approval rating would be 20%. Obama's approval remains high because people simply like him, not necessarily what he's doing.
"For Obama's approval ratings to dip much below 40% would, to me, be a 'Black Swan'."
Odd. I would have called it 'long expected'. :)
As I see it, it's Obama's deep pockets that's the worry. Snaps his fingers and another billion goes into the coffers. And, while I'd LIKE to think the American people can see through a barrage of TV ads and do what needs to be done, every time in history someone has judged the American voter to be one way or another, he's ended up with copious amounts of egg on his face. Sometimes it seems like they're the sharpest bunch on the planet, other times you just want to hide your head in shame. Pretty good showing in Nevada and NY recently, so we'll call that a good sign that they're still on the same track they were on in the last mid-term.
It has been one PR disaster after another for the President and his Administration. The latest is that there is another "scandal" brewing over another fund raiser that owns a company - this time the company wants to screw with the military GPS system frequency allocations. And yesterday's ATTACK WATCH Twitter/on-line fiasco which is the laughing stock of the internet.
I don't know where this "likability" rating comes from. It can't be legitimate - how can you like somebody who is so obviously out of touch with average America and, frankly, is trying to impose his will through the use of Executive Fiat.
I think the President is electoral burnt toast. Somebody in the Democratic Party is going to recognize that he's not going to be elected and he is going to have a primary challenge. Dunno - we'll see.
If you live in an urban area, particularly in the Northeast or West Coast, you'd understand the likability factor. I am more in line with your view. That is, how can you like someone who is simply so out of touch?
But seriously, people here actually like the guy and any of his 'missteps' are conveniently blamed on Republicans or Bush. I can't stand Krugman, but I know people who love the guy. Why? No idea. He's out of touch, too. But people like him.
The only reason I can come up with is 'compassion'. People are driven by emotion and Krugman 'shows compassion'. So does Obama. Republicans are incapable of compassion, if you listen to the MSM. Which is news to many of the people in my family, but hey - there it is.
Infusing the Black Swan with the aspect of stupidity makes it less compelling as a theory, but there is alot of stupidity which comes into play. Of course, stupidity comes into play on everything we see in life. The Titanic was 'unsinkable' because nobody imagined a scenario exactly like the one which occurred. Stupid? Not exactly, but certainly tunnel vision. Speeding up to set a record when you know icebergs are out there - stupid? Probably, but chances were taken before that played out well, so he was playing the odds. When you play the odds and they work, you're 'smart'.
Markets show stupidity at play constantly. Market crashes are one - herd behavior is stupid. Then again, the run up to the top was herd behavior, too. So that was technically 'stupid'. But we were getting rich while that happened, so we were all geniuses until the crash.
Stupid plays a role in our everyday lives. The housing crash and the guy who bought the $500,000 home with no money down on a $50,000 a year salary? Stupid. Clearly stupid.
But hey - prices only go up! So how stupid is he when that's all he reads and hears from the MSM? Do I blame the house buyer for his lack of discernment, or the media for 'misleading' him?
A story that impacted me was when I was visiting family Florida in 2006, and I was told to 'buy land in Florida, prices are going through the roof'. As I drove around, I saw a condo complex that was 100% sold out. The 3 buildings were completed, and the parking lot was empty. Surely, if the market is booming, the place to buy is in these units, with the ocean and bay views, 100% sold, right? I said no thanks, because money in Florida in 2006 would be dead money soon enough. If the units were sold, where were the residents? Clearly, it was all speculative. I considered that 'stupid'.
So, I get to say I was 'smart'. But so does the guy who made millions before the bubble burst. Try reading that fellow Kiyosaki who wrote the "Rich Dad" books. I can't stand him. But people follow his advice every day because he's wealthy. So he must be 'smart'. Isn't it 'smart' to follow 'smart' people?
It's all situational. So I'll stick with 'unexpected' and expect that regardless of whether good things happen or bad things happen, stupidity played a role somehow.
Reading about Black Swan Events reminds me of the "Mule" character from the Foundation Trilogy.
That was a very interesting read.
Ever since I heard the term used in context, I've looked at the so-called "Black Swan" events as kind of a corollary to Heinlein's Razor - paraphrase: "Never attribute the unexpected to that which can be adequately explained by stupidity, but don't underestimate the unexpected." :>)
As it says, you can't account for stupidity and you can't plan for the unexpected and stupidity often leads to the unexpected.
Wait -- I just got it. The Black Swan of all Black Swans when it comes to dashing Obama's presidential hopes.
You want 'unexpected'?
Obama is caught in bed naked with another woman.
An intern, no less.
A white intern. :)
And we have a winner!
I mean, the criteria was 'unexpected', right?
9/11 should not be considered a black swan. Such an attack was described in a 1994 best seller (which I read).
I mentioned 'Debt of Honor' in my 9/11 post. Still, the people who read the book were fairly few, and there were some major differences. While the book was the first thing I thought of that morning, I was still as 'shocked' as anyone else that it had actually happened. So, yeah, it still qualifies as a serious kick-ass Black Swan event. Poor old Sato! You could hardly blame the guy. Besides, all he did was take out Congress. Might have earned himself a medal today. :)
Just because something is 'predicted' doesn't disqualify it as a Black Swan. In the article, I didn't mention Billy Mitchell directly (except with the picture), but he 'predicted' the attack during his court-martial.
The prediction was ignored. By ignoring it, that makes it unexpected. And ignoring it was based on the assumption (yes, we assume things at times) that such an attack was so outlandish as to be inconceivable. Hell, when it happened, we already were using radar! We saw the planes coming in before they arrived! We also thought they were our own.
Plenty of people 'predicted' the concept of flying planes into the Twin Towers. Rick Rescorla, who was Morgan Stanley's chief of security, pointed out the flaws in security should just such an event occur. But, c'mon - who would willingly kill themselves and hundreds of others by flying a plane into a building? It was a crazy idea. Until it happened.
The primary aspects of the Black Swan remain its unexpected nature, and the impact it has on the psyche of a wide swathe of society.
In politics, the impact on the psyche is open to manipulation, which is why I said there are many 'expected' things which would qualify simply because of how they will wind up being depicted by the media.
um...Billy Mitchell predicted an attack on Pearl Harbor. I seem to have typed a wee bit too fast.
Sarah was only there to catch Teh Won in flagrante.
(Attack Watch notified.)